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Interest rates unlikely to rise until 2016

07.08.2013

The Bank of England Governor Mark Carney today issued his Forward Guidance, suggesting that interest rates are unlikely to rise until unemployment has fallen to a threshold of 7 per cent. While the Bank is not promising to keep interest rates low for a particular period of time, it expects that rates will not rise above their current level of 0.5 per cent before the third quarter of 2016. This is far more certainty than we have ever had and while it brings no comfort to savers, it will reassure overstretched borrowers who are worried about potential rate rises.

We expect fixed- rate mortgages to fall even further on the back of this announcement. They may already be at historic lows but if lenders are to convince borrowers to opt for a fix when interest rates are unlikely to rise, then pricing needs to be attractive. Borrowers who prefer the certainty of a fixed rate and particularly those looking for something beyond the next three years when it is less certain what will happen with interest rates, might wish to consider a five-year fix.

Speak to Anderson Harris if you require more assistance and advice.

 

Jonathan Harris
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Jonathan Harris
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